Crony capitalists line-up changes in UP as Rahul Gandhi stumbles

As India waited this morning for results of five state assembly elections, the most telling headlines in the day’s newspapers, along with Rahul Gandhi’s dismal failure to galvanise votes in Uttar Pradesh (UP), were on share movements yesterday of leading companies – Jaiprakash (JP) group companies went down while Anil Ambani’s Reliance (ADAG) stocks went up, as did shares of sugar companies.

.

Those share movements, which continued today till they were overtaken by heavy falls on the stock market, reflect the ousting in the UP elections of the blisteringly corrupt Bahujan Samaj Party (BSP) government, led by chief minister Mayawati who favoured JP companies with massive land deals and a grand prix circuit, and also persecuted sugar companies with vindictive extortion.

They also welcomed the overwhelming victory of the Samajwadi Party (SP), whose leader Mulayam Singh Yadav (right) has helped Ambani with land for power projects in the past and will be kinder to sugar companies. Another group that will benefit is Sahara, headed by Subrata Roy, which has large real estate interests.

Such is the condition of crony politics in India’s largest state which has a population of some 200m – roughly the same as Brazil, or France Germany and Italy combined. The question now is whether the SP, led by Mulayam Yadav, 72, who has been chief minister three times before (1989-91, 1993-95 and 2003-07), will abandon the gangland ridden “goonda raj” of his past administrations and let his 38-year old son Akhilesh (below), who has been an MP since 2000, push constructive development policies.

Overall the state assembly election results announced today have been extremely bad for Congress, not only in UP where Gandhi’s dynastic credentials failed to make a mark, but also in Punjab which it unexpectedly lost to the regional Akali Dal party, and in Goa where it was routed by the Bharatiya Janata Party (BJP) after its state government’s involvement in extensive mining corruption. To varying degrees, these results show voters reacting to Congress’s dire performance and weak leadership nationally, with the government’s series of corruption scandals and other policy failures, as well as to price rises and other local issues.

.

In UP, once its main political base, Congress did dismally – even losing heavily in three parliamentary constituencies (Amethi, Rae Barelli and Sultanpur) where Rahul and Sonia Gandhi are the MPs. It won only 27 seats in the 403-seat assembly, up from 22 last time (see table below). That was far far short of the 100-plus it had hoped for, and less even than the figure of around 60 that would have been tolerable. Its vote share was marginally better, rising from 12% to 17%.

Gandhi had seemed to be having a good election campaign in terms of personal image because he developed, during some 200 meetings, into a powerful speaker (as I noted here a month ago). However he appears to have had little impact on many places that he visited where he garnered widespread publicity for chatting and staying with villagers.

He and his family projected their dynastic credentials with aplomb, but the result will inevitably lead to questions about the future of the clan. Despite his protestations of commitment to UP, Gandhi was not identified personally to the future of the state because he was not standing as the potential chief minister (that would have been an extraordinarily difficult job, which he scarcely needs when the prime minister’s job has – at least till now – been within his grasp). He also spent most of his time telling his massive poor audiences what they did not have, and how awful Mayawati’s government had been, instead of having concrete proposals for boosting their livelihoods.

That was a losing formula that was made worse, according to party spokesmen, by weak constituency-level organisation and ill-advised selection of candidates. The lesson therefore is that the dynasty’s assumed “magic” has limited currency, though Gandhi’s energetic campaigning might well help Congress in the next general election that is due in 2014.

Speaking on Indian tv this afternoon, Gandhi took responsibility for the UP defeat and said he would “continue working for the people” and to improve the country’s political system. “I expect some victories and some defeats along the way, and this is one of the defeats,” he added, indicating some analysts are suggesting that he does not have ambitions to enter the government and become prime minister any time soon.

.

Gandhi had an easy target in Mayawati, whose overwhelming corruption and self-aggrandisement has been among the worst ever seen in independent India. Businessmen have told me she extorted an alleged $100m a year from the sugar industry, mainly by using minor breaches of regulations to demand corrupt payments that far exceeded routine bribes. She started court cases against reputable heads of well known companies, who sometimes fled to avoid jail. In futile attempts to clean up her government’s image, she sacked or suspended over 20 ministers in December and dropped contentious candidates, but it was clearly too little too late.

Economic growth in UP over the past five years of around 6%-7% has looked good on paper, but neighbouring states did much better and the growth was focussed to a considerable extent on Mayawati’s pet infrastructure projects, leaving vast areas of the desperately poor state under-developed. She is also credited with improving street-level law and order, which was appalling when Mulayam Yadav was last chief minister, and she always relies on the state’s strong Dalit (bottom of the caste hierarchy) voters for support – but these factors did not save her from defeat.

The Bharatiya Janata Party (BJP) had mixed results. It unexpectedly won control in Goa, but marginally failed to win a clear victory in Uttarakhand (a state adjacent to UP). Its score in UP was worse than predicted and it even lost for the first time ever in Ayodhya, a town seen as a symbol of BJP power and Hindu nationalism.

It is too early to interpret all the national implications of the polls. Both Congress and the Gandhi clan have been weakened. All parties, including some in the Congress-led coalition, will feel empowered to step up their attacks. This affects the stability of the government, which has to present the Budget next week and then get it through a probably turbulent parliament. The results also change the balance of power for Rajya Sabha (upper house) indirect elections later this month and the choice of India’s next president in the summer. Much will depend on whether Congress can rely on parliamentary support from the SP and BSP.

The most constructive hope from the results is that Mulayam Yadav (once a kushti mud wrestler) and his son will lead UP better than the family (which includes several carrying the “goonda” tag) has done in the past – with Akhilesh Yadav maybe showing that dynastic succession can sometimes provide constructive leadership from a younger generation, even as Rahul Gandhi’s born-to-rule image takes a beating.

Responses

[…] this as a nationally insignificant local election, but it follows a trend set by the party’s humiliating defeat in Uttar Pradesh state elections early last month plus losses in two others states and in Mumbai’s municipal […]

John – Interesting analysis of the political scenario – It would have been good had you also mentioned the challenge of addressing the issues of acute poverty,water and sanitation, inclusive development and access to justice – I could go on – lets not forget the poor electorate and their expectations of change. We should be pushing the new administration and holding them to account for development and reduction of poverty.

If Yogesh,John and Rahul are be belived and if Rahul learnt a lesson, He better bring back the money from Swiss bank where he and his mother have deposited their black money and listen to Anna Hazare.

By: Om Prakash Sharma on March 7, 2012 at 1:03 pm

Dear Sir,Corruption is genetically embedded in Congress and SP and to some degree in every politicians. It is only the system which can keep them on hold.It is only time which will tell if the new generation is able to shed the load of past corrupt practices engaged in by their fathers.

By: Om Prakash Sharma on March 6, 2012 at 11:21 pm

My comment on your blog on 08 Feb 2012 where you wrote about Rahul, was as under:

“I thought that John has understood the politics here but article seems to be written by novice. Come on John !
All know why manmohan is there and what for sonia is waiting ?
In UP, the charming prince will learn his first lesson. And guess what?
Being in news does not help in getting votes.”

Now , Rahul is saying that he has learnt a lesson in this election battle for UP. I hope he better does it. We do have great hopes with this novice character. He needs to believe in himself and jump in to public; without advice of his advisors. These advisors are short sighted ‘Chamachas’ and Rahul needs to understand how to deal with them.